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» Kirk - DOW AND S&P 500 GIVE SELL SIGNALS
.Read Kirk's Recommended Book: Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy
DOW AND S&P 500 GIVE SELL SIGNALS -- NEXT SUPPORT IS AT 200-DAY AVERAGES -- WHY 1140 IS IMPORTANT SUPPORT FOR THE S&P 500
The following with better charts was Emailed to subscribers by John Murphy on 1/21/05.
Fri, 21 January 2005 5:16 PM ET
NASDAQ HEADED TO 200-DAY AVERAGE ... The Nasdaq market has suffered the most technical damage of all the major stock indexes. Yesterday I showed the Nasdaq market having broken a five-month up trendline drawn under its August/October lows. It's now headed toward its 200-day moving average and its October peak around 1975. That would also represent a 50% retracement of its August/December advance.
<img width=520 height=468 src=http://stockcharts.com/def/servlet/Sharp... >
DOW GIVES P&F SELL SIGNAL ... The Dow ended the week beneath 10400 for the first time since early November. It's also headed toward its 200-day average. The point & figure boxes in Chart 3 show that the Dow has given its first "sell" signal since last November.
<img width=520 height=468 src=http://stockcharts.com/def/servlet/Sharp... >
<img width=520 height=442 src=http://stockcharts.com/def/servlet/Sharp...>
S&P 500 ALSO GIVES P&F SELL SIGNAL... The S&P 500 closed beneath 1170 for the first time in over two months. As a result, its point & figure chart has also given a sell signal (when the last column of o's breaks an earlier o column). The daily bars in Chart 4 give show the next support level to be around 1140. There are a number of reasons for choosing that level. For one thing, it's near the 200-day moving average. For another, 1140 would be a 61.8% retracement of the upleg that started in late October as shown by the green horizontal lines. That level also represents a 50% retracement of the whole advance that started in August. Then there's the early October peak at 1942 (see box). That's important for two reasons. One is based on the chart concept that a previous peak should act as support on a downside correction. The other has to do with Elliott Waves.
<img width=520 height=468 src=http://stockcharts.com/def/servlet/Sharp...>
WHY 1140 IS SO IMPORTANT FOR THE S&P 500 ... I've written many times about my belief that the market rally that started in August was the fifth (and final) upleg in the cyclical bull market that started in October 2002. I also pointed out, however, that even the final upwave should have five waves. Unfortunately, that five-wave sequence since August isn't that clear. Chart 4 shows three clear upwaves from the August bottom. As I've written before, the current setback could be a Wave 4 correction which would allow for another retest of the old high. There are a couple of ways to determine if the current decline is more serious. One is to see if the 62% retracement level holds at 1140. If it doesn't, then we've probably already seen the high. Another way is to watch the early October peak at 1142. In Elliott Wave work, a Wave 4 should never fall below the top of Wave 1. If it does, that would mean that the rally starting in August has ended. It would also mean that the entire cyclical bull market that started in late 2002 has ended as well. I happen to think that is the case. But a close under 1140 would confirm that a new bear market is starting.
For 2005, "Kirk's Newsletter Portfolio" was Up 13.2% vs. QQQQ up 1.2% vs. DJIA down 0.6% vs. S&P500 Up 4.8%
As of 12/31/05 the Total Return for "Kirk's Newsletter Portfolio" since 12/31/98 is Up 197% while the S&P500 only up 12%!!! & NASDAQ only up 1%!!! (my explore portfolio beta is about 1.5)
What should be quite clear is a “buy and forget” market strategy using the DOW, S&P500 or NASDAQ would have under performed holding money funds over the past seven years while my newsletter portfolio nearly tripled every dollar invested
Key to my success is I pay attention to Garp. GARP stands for “Growth At a Reasonable Price.”
Make sure you read my latest article: NanoViricides, Inc. [NNVC] (01/09/06) where it seems I’ve had the good fortune to highlight a stock just before it took off to more than double!
Since beating the market is hard for most to do, I recommend a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE, buy-and-hold, no load, mutual fund portfolio and then EXPLORE with the remainder. To build your core portfolio, I suggest a diversified basket of index funds such as one of the two Vanguard index fund portfolios I recommend in "Kirk's Newsletter ." For the remainder, I recommend Kirk's Newsletter Explore Portfolio.
Through Jan 1, 2006, these two core portfolios, composed of seven different Vanguard Index funds, have beaten the S&P500 over the past five and seven years by over 20% using no market timing and only rebalancing once a year. These index fund portfolios include US equities, international equities and an REIT index fund.
As of 12/31/05 the Total Return for "Kirk's Newsletter Explore Portfolio" since 12/31/98 is Up 197% while the S&P500 only up 12%!!! & NASDAQ only up 1%!!! (My explore portfolio beta is about 1.5)
-- posted by Kirk
» Kirk - More About John Murphy
.<img src=http://stockcharts.com/corp/images/john_... width=276 height=355 align=left>John J. Murphy
Chief Technical Analyst at StockCharts.com
John J. Murphy, former technical analyst for CNBC, has over 30 years of market experience and is author of several best-selling books, including Technical Analysis of the Financial Markets - which is widely regarded as the standard reference in the field. His Intermarket Technical Analysis created a new branch of technical analysis emphasizing market linkages. Stocks & Commodities Magazine (October 2002) described his intermarket work as "unparalleled". His third book The Visual Investor applies charting principles to sector analysis.
John has appeared on Bloomberg TV, CNN Moneyline, Nightly Business Report, and Wall Street Week with Louis Rukeyser - and has been quoted in Barron's and other prominent financial publications. He received a BA in Economics and an MBA from Fordham University in New York. In 1992, John was given the first award for outstanding contribution to global technical analysis by the International Federation of Technical Analysts - and is the recipient of the 2002 Market Technicians Association Annual Award.
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- The Visual Investor : How to Spot Market Trends
- Intermarket Analysis : Profiting from Global Market Relationships
-- posted by Kirk
» Kirk - Update for Fri, 4 February 2005
.From John Murphy: Update for Fri, 4 February 2005 5:49 PM ET
IT LOOKS LIKE MARKET IS IN FIFTH WAVE OF FIFTH WAVE ... From a longer-term perspective, very little has changed. I've written several times about the possibility of another upleg which could challenge (and maybe even exceed) the late 2004 peak. My work, however, still suggests that another upleg would probably be the final one in the cyclical bull market that started in October 2002. Or, to put it in Elliott Wave terms, I believe the market has begun the fifth wave of a fifth wave. [The fifth wave of the cyclical bull market started in August. The fifth wave of that fifth wave started this month]. I've been asked if there's a calendar date for a possible top. One possibility is March which would be the two-year anniversary of a major bottom. The other would be April. After January, April is the next strongest month in the first half of the year. One of the reasons I recently suggested some profit-taking during January was because that was the tail end of the strongest three month span of the year that normally starts in November. April ends the strongest six-month span that also starts in November. If the market does move to new high ground, my best guess for a top would be April.
-- posted by Kirk
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